When it comes to the smartphone market, it is safe to say that Microsoft has its fair share of misses. The tech giant has plans of releasing a brand of affordable devices on emerging markets like India, but this was overshadowed by Google when it released its Android One brand.

The launch of Windows 10 for mobile devices did not save Microsoft's deteriorating presence in the smartphone market as well. A Gartner report revealed that Microsoft's market share from third quarter of 2014 shrank from three percent to less than two percent in the third quarter of this year.

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Microsoft recently launched two new smartphone devices which target the premium segment of the market. There are also reports claiming that the Redmond-based company is developing a smartphone version of its otherwise successful Surface tablet devices. The smartphone version of the tablet is called the Surface Phone.

People with insider knowledge said that the new flagship device will be developed by Panos Panay and the team of engineers behind the Microsoft Surface and Surface Book devices. The new flagship device is expected to hit the market within the latter half of 2016.

Majority of Microsoft's smartphones, except for the Lumia 950 and Lumia 950XL, are within the sub-$200 segment of the market. Most of these devices are also sold in emerging markets with promising tech growth and smartphone adoption.

However, due to excessive competition, devices released in this market generates very low margins and in turn are less profitable. On the premium segment, gross profit is reported to be somewhere around 40 percent.

The market, however, is dominated by well-established brand like Apple's iPhone. Considering the current market situation, Microsoft plans to focus into the top-tiered segment of the market and create premium quality devices with higher price points.

TagsMicrosoft smartphone, smartphone market, Microsoft smartphones, Microsoft Surface Phone, Surface Phone, Surface Phone news